New local group is exploring T&G purchase

Friday

Mar 21, 2014 at 6:00 AMMar 21, 2014 at 10:05 PM

By Shaun Sutner TELEGRAM & GAZETTE STAFF

WORCESTER — An informal group of nonprofit foundations and local business and civic leaders is exploring the possibility of buying the Telegram & Gazette from The Boston Globe and Red Sox owner John W. Henry.

One model being discussed is running the paper and its website, telegram.com, as a nonprofit corporation, similar in some ways to how the trust-owned New London Day in Connecticut and foundation-owned Tampa Bay Times in Florida are set up, according to some involved in the discussions.

It is not publicly known what price Dirks, Van Essen & Murray of Santa Fe, the merger and acquisition firm running the sale for Mr. Henry, is seeking for the T&G, which was put up for sale in November.

The estimated value of the newspaper has varied widely. Peter Cohan, a T&G columnist who teaches business strategy and entrepreneurship at Babson College, has set the price as high as $15 million, while The New York Times Co., the newspaper's former owner, in February valued the company for tax purposes at $7 million.

The Times Co. bought the T&G in 2000 for $296 million. Mr. Henry purchased the Globe and the T&G for $70 million last year.

Mark W. Fuller, chairman and treasurer of the George F. and Sybil H. Fuller Foundation, said he and his foundation, which makes annual grants to dozens of local nonprofit groups, would be interested in participating in an ownership group, but only if the price were set below $10 million.

Owen Van Essen, president of the brokerage firm, said he has not heard from anyone local recently. "It's been public information since early December and I talked to some people early on and they signed nondisclosure agreements.

"This is apparently something new that's bubbling up 100 days after the announcement," he said.

The only previous local attempt to acquire the paper apparently ended earlier this month, when Polar Beverages Chief Executive Officer Ralph D. Crowley Jr. and retired T&G Editor Harry T. Whitin, acting as individuals, said they were pulling out of the process.

Mr. Crowley on Thursday would not confirm or deny whether he is part of the most recent group effort. Mr. Whitin declined to comment.

Mr. Crowley and Mr. Whitin made a previous bid for the T&G five years ago when it was owned by The New York Times.

Mr. Henry did not respond to an email seeking comment on the recent local interest. Mr. Van Essen said he was forwarded a copy of the email sent to Mr. Henry.

James W. Hopson, interim publisher of the T&G, declined to comment. Earlier this month, he said that if no local buyer emerged, the paper would be sold to "someone else."

Mr. Henry told T&G employees at a meeting in the newsroom Nov. 26 that he was looking for the "right," preferably local, buyer for the paper and if he didn't find one, he might hold onto the media property.

"We are operating under the assumption that Mr. Henry meant what he said when he was at the T&G," said John Hill, president of the Providence-Worcester Newspaper Guild, which represents newsroom employees at the T&G and Providence Journal. "He said at that time that his preference was local ownership, and if there are local groups trying to put together bids, we're assuming, based on what he said, that he'll be listening to them."

Leaders of three of the city's biggest nonprofit foundations say they would only be interested in partial ownership stakes if a deal made economic sense and allowed the paper to operate profitably without the need for significant staff cuts.

Mr. Fuller said he was part of the 2009 bid by Mr. Crowley and Mr. Whitin. He said that reconstituting the news organization as a nonprofit would allow it to maintain its journalistic mission during a period when newspapers across the country have lost readers and revenues. Such an effort would also buy time for the paper to innovate over the next decade or so during what most observers see as a transition to a digital-dominated news landscape, he said.

"The nonprofit may be a better model because you're not chasing every profit dollar," Mr. Fuller said. "And we'd have more time to look at future models."

The New London Day's publisher, Gary Farrugia, said that paper's unique ownership arrangement — in which the for-profit paper is owned by and administered by a nonprofit trust — has allowed it to retain staff and keep news coverage relatively stable even during the recession that saw many newspapers cut back. The trust distributes excess profits to the community in the form of charitable grants.

"The model itself is an elegant and even nimble model for a media company," Mr. Farrugia said. "It allows us to be absolutely independent. We can cover the news and we can invest a greater share of our corporate resources into news coverage."

The other Worcester foundations that could be involved are the Stoddard and Alden trusts, both of which are run by city lawyer Warner Fletcher.

Mr. Fletcher said he is interested and, with the approval of his trustees, would be willing to buy into ownership of the T&G, if he could be persuaded that the paper could survive economically on its own, whether as nonprofit or for-profit.

"We'd have to feel very confident in and comfortable with the expertise of the new ownership," Mr. Fletcher said. "We'd be looking at this as an investment. We'd have to be comfortable that it is a good investment of charitable dollars and not just throwing good money after bad. And we wouldn't want to be involved (unless) it was a prudent valuation."

Contact Shaun Sutner at ssutner@telegram.com. Follow him on Twitter @ssutner.